DATE : 11 MAY 11
Gold, Silver Extend Advance on China’s Inflation, European Debt Concern
Gold gained for a fourth day in London as concern about inflation and Europe’s debt woes spurred demand for precious metals as a protection of wealth. Silver rose.
China’s consumer prices rose 5.3 percent in April from a year earlier and have exceeded the government’s target each month this year, data showed today. The euro was little changed against the dollar amid speculation European leaders are slowing the drive to grant Greece additional aid, fueling concern the nation may be forced to restructure its debt.
“We still have unresolved issues with the euro zone,” said Bernard Sin, the head of currency and metal trading at MKS Finance SA, a bullion refiner in Geneva. “In the long term, it may be sensible to hedge against inflation with gold. Physical demand is extremely good” from India, he said.
Immediate-delivery gold rose $9.53, or 0.6 percent, to $1,525.80 an ounce by 9:41 a.m. in London. Prices reached a record $1,577.57 on May 2 before slumping 4.4 percent last week. Gold for June delivery was 0.6 percent higher at $1,525.40 an ounce on the Comex in New York.
China’s inflation was more than the 5.2 percent median of 30 economists and compared with a 5.4 percent increase in March. The government aims to limit inflation to 4 percent this year, and has raised interest rates four times since October to cool growth. Inflation in Germany accelerated more than initially estimated in April, data showed today.
‘Appetite’ for Gold
“Signs of continued pressures might see the market’s preoccupation with rising global inflation resurface, and consequently see some inflation-hedge demand,” Marc Ground, an analyst at Standard Bank Plc, wrote in a report. “With the resurfacing of euro-zone sovereign-debt concerns, we expect to see continued appetite for gold and silver.”
Standard & Poor’s this week downgraded Greece’s credit rating for the fourth time since April 2010, signaling that the region’s debt crisis is escalating. European leaders slowed the country’s drive for extra aid, saying the government in Athens must first make good on pledges to overhaul an economy mired in a three-year recession.
UBS AG’s gold sales to India so far this year are more than 10 percent higher than in the same period last year, London- based analyst Edel Tully said today in a report. India is the biggest buyer of bullion.
Silver for immediate delivery gained 1.9 percent to $39.2525 an ounce. The metal for July delivery climbed 2 percent to $39.255 an ounce on the Comex.
Silver Assets Gain
Silver futures slumped 27 percent last week, the worst weekly drop since at least 1975, as investors sold commodities from oil to copper and exchange owner CME Group Inc. (CME)increased the cost of making new speculative positions. Prices slid as much as 34 percent since reaching a 31-year high of $49.845 an ounce on April 25. A bear market is defined by some investors as a decline of 20 percent or more.
Silver assets held in exchange traded products rebounded from a six-month low, gaining 208.03 metric tons, or 1.5 percent, to 14,399.24 tons, Assets dropped 7.6 percent in the six days through May 9. Gold ETP holdings fell 4.49 tons, or 0.2 percent, to 2,050.15 tons yesterday, data showed.
Palladium for immediate delivery gained 0.6 percent to $734.50 an ounce. Platinum rose 0.4 percent to $1,803.63 an ounce.
Crude Oil Futures Halt Two-Day Advance on Chinese Inflation, European Debt
Oil snapped a two-day surge in New York on concerns that China will boost interest rates to tame inflation and on signs that U.S. crude supplies are increasing.
Gasoline dropped as much as 1.9 percent on speculation that a 9 percent rally in the past two days was excessive. The fuel had advanced on concern that flooding on the Mississippi River will disrupt U.S. supplies. Yesterday the industry-funded American Petroleum Institute said crude inventories jumped last week. The Energy Department will release its data today. Consumer price rises in China exceeded the government’s target last month, data from the statistics bureau in Beijing showed.
“The API report took the wind out of the market’s sails,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “The latest U.S. demand data has been weaker than normal for the time of year, but the fact prices have not fallen further is a sign of strength, and we could see Brent return to $120.”
Crude for June delivery declined as much as 74 cents, or 0.7 percent, to $103.14 a barrel on theNew York Mercantile Exchange. It was at $103.35 at 9:55 a.m. London time. Yesterday, the contract rose 1.3 percent to $103.88, the highest settlement since May 4. Prices are up 37 percent in the past year.
Brent crude for June settlement on the London-based ICE Futures Europe exchange was 42 cents lower at $117.21 a barrel. Yesterday, it gained 1.5 percent to $117.63, the highest settlement since May 4.
North Sea Brent crude’s premium to U.S. benchmark West Texas Intermediate widened for a fourth day. The spread between the two front-month contracts increased to $13.87 a barrel from $13.75 at settlement yesterday,
China Inflation
China’s consumer prices climbed 5.3 percent in April from a year earlier, according to the statistics bureau in Beijing. That’s higher than the government’s 4 percent full-year target and above the 5.2 percent median The country’s central bank will increase interest rates once more this year, adding to four since mid-October, Officials have boosted banks’ reserve requirements and reined in credit growth from record levels in 2009 and 2010.
U.S. crude stockpiles climbed 2.95 million barrels last week to 367.2 million, the API said. The Energy Department’s weekly report, scheduled for release at 10:30 a.m. in Washington may show supplies rose 1.5 million barrels
